Study Finds Grocery Prices Drop 55% in Neighborhoods With Discount Grocery Stores
Last fall, we reported on the influence that the German-based grocer Lidl and its direct competitor, Aldi, have on setting prices for all neighboring supermarkets. Essentially, Lidl and Aldi have such low prices that other grocers have to lower theirs just to stay in business—and a new study from the University of North Carolina at Chapel Hill shows just how much of an effect that has on their competition.
Forbes reports the study compared prices on staple grocery items bought at Lidl, Food Lion, Kroger, Publix, Walmart, and Aldi—it found prices dropped by a whopping 55 percent when Lidl entered the same market.
Full disclosure: The research, published by UNC’s Kenan-Flagler Business School, was actually paid for by Lidl. However, Katrijn Gielens, marketing professor behind the study, said that Lidl’s competitor price influence is three times greater than when a new Walmart enters a market.
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On average, U.S. grocers' prices are 25 percent higher than Lidl’s, and the study showed that prices on common grocery items were 100 percent higher at Publix, 50 percent higher at Kroger, 36 percent higher at Food Lion, and 9 percent higher at Walmart. And Aldi, Lidl’s biggest competitor, had prices that averaged 5 percent higher.
But once Lidl opened up a store in the same region as a competitor, their prices fell: A half-gallon of milk was suddenly 55 percent cheaper on average, and items like ice cream, bananas, and cheese were 15 percent cheaper than in areas without a Lidl.
If there’s a Lidl in your area, you could save up to $17 at Food Lion and $14 at Aldi on a basket of the same exact food items. If there’s not yet a Lidl on your block, don’t panic. Several locations are slated to open by the end of this year.